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Budgeting for Digital Marketing
Taylor Tunnison • March 31, 2022

Budgeting for digital marketing is critical in the 21st century. Your future customers are probably online every day, and it’s important to meet them where they already are. Traditional methods like TV, radio, and print advertising just don’t deliver reliable results anymore. That’s because these broad approaches often aren’t targeted, personalized, or engaging enough to reach the right people.


The main benefit of digital marketing techniques is their flexibility. Many tactics can be adjusted on the fly to deliver the maximum return on investment (ROI) over time. They do this by allowing you track how well campaigns are doing throughout their duration. For instance, web traffic can be measured monthly to determine if something is making a difference. Social media platforms also provide detailed feedback on post reach and engagement, as well as demographic data. Critical key performance indicators (KPIs) like click-though rate (CTR) can indicate whether any attempt met specific goals.


In general, good marketing strategies help companies promote their products and services to the right target market. This allows them to increase sales by creating and nurturing genuine relationships. It also reduces overhead by taking a precise approach to advertising, which ensures the greatest ROI per dollar of marketing budget. Let’s take a closer look at how to budget for digital marketing.

Digital Marketing

Many companies are making the shift to digital. As more people spend more time online, the value of professional websites, social media profiles, and digital advertising becomes undeniable. The ROI of these channels is often higher than traditional marketing methods. Plus, the data they provide is useful for fine-tuning the approach along the way.


Digital marketing campaigns target the right audiences to produce high conversion rates while also providing measurable results. The best campaigns involve multiple tactics and channels including email, webpages, search engine optimization (SEO), and social media platforms. Your marketing plan will likely measure the following items in its budget:


  • Campaigns: platform-specific goals, timelines, and deliverables;
  • Advertising: graphic design, copywriting, SEO practices, paid and organic social media, and pay-per-click (PPC) or programmatic ad spend;
  • Software: tools, accounts, and software-as-as-service (SaaS) like cloud platforms, social media schedulers, and keyword research programs;
  • Training: materials such as online classes, subscriptions to publications, as well as industry workshops, webinars, and conferences;
  • Salary: compensation for staff members and subcontractors.


Allocating a proper budget for these items will require attention to detail. Successful companies prepare early and have a realistic expectation of costs before implementing any strategy. Do not simply go with your best guess. Instead, do your best to plan, monitor, and adjust your strategy every step of the way. Whether you work with an agency or a freelancer, get multiple quotes to ensure the best fit possible. 


It’s also important to review goals, campaign performance, marketing plans regularly. This will help to refine target markets and the ideal strategy for optimum growth. Campaigns that don’t meet expectations can then be analyzed to determine opportunities for improvement. 

Budget Allocation

Organizations must account for what they can afford. Regardless, budgeting for digital marketing involves reviewing and carefully considering business goals. Assess your situation and imagine the best path forward in order to achieve your current and future aims. The budget you prepare will depend almost entirely on your available capital and overhead cost.


Exactly how much should one spend on digital marketing? The answer varies widely between companies and industries. However, a good baseline can work wonders. We recommend spending at least 1% of annual revenue on digital marketing. Of course, this is only an estimate, and it can be adjusted to suit your unique goals. As much as 3-5% may be allocated, especially if you’re promoting new products, services, or an upcoming event.


Effective marketing budgets follow the 70-20-10 rule. This simple tactic can help your marketing team distribute its dollars in the most efficient way possible. Begin by focusing the majority of your efforts, roughly 70%, on methods with a proven track record. For example, if your company website brings in most new leads and sales, be sure to take good care of it. Continue paying for hosting and maintenance, as well as your domain name and SSL certificate. Consider adding a blog page and claiming your Google Business Profile if you haven’t yet. Also, don’t forget to update your website regularly. If you offer ecommerce options, ensure they are current and optimized for mobile devices.


Split 30% of your marketing budget between emerging trends. The exact ratio is up to you, but don’t be afraid to try something new with at least 10%. Consider starting a YouTube channel or a Twitter, LinkedIn, or Instagram profile if you haven’t yet. You may even try boosting some Facebook posts to promote your latest product, service, or approaching event.

Budgeting Tools

There are many free online budget calculators available. These helpful tools can provide a rough estimate based on business information like revenue, level of risk, and relevant industry. Their results are intended as a bellwether to help implement the most appropriate long-term digital marketing budget.


Planning for marketing efforts can be tedious, especially if you’re beginning from scratch without any previous baseline. However, it’s certainly better to form a basic budget sooner rather than later, as it’s important to begin tracking progress early. After all, you can’t improve what you can’t measure. In this way, you can see what channels are most effective, then adjust and easily adapt to new changes in trends and technology. 


Marketing gurus at HubSpot have tons of useful resources on their website, such as this thorough budgeting guide. They even include free templates to help you get started. Their detailed blog post features examples of costs alongside suggestions and straightforward definitions. It mentions paid Google ads, social media platforms, content and email marketing, and search engine optimization. HubSpot also includes a step-by-step guide to aid in budgeting for digital marketing.


Always prioritize your buyer’s journey from start to finish. Ask yourself how customers usually find you online, and what they need to know before making a purchase. Keep in mind how many website visits and leads you generate each month, as well as your average conversion rate. Then, align your marketing budget with your company goals. Promote new products or services, sponsor social media posts to grow your following, and work to increase your organic and paid website traffic. Don’t forget to keep your priorities straight, measure the ROI for each effort, and beware of hidden marketing costs including revisions and adjustments.

Don't Neglect Digital Marketing

Your current and future customers are already online. They likely spend hours on news sites, search engines, and social media platforms each and every day. Putting yourself in the right place at the right time can make a major difference in generating new leads and additional revenue. In our opinion, every company needs a professional website, at the very least. A Google Business Profile is also essential to drive traffic, as are SEO best practices. Social media channels like Facebook, Instagram, LinkedIn, and YouTube are great ways to reach new audiences for little to no cost. Budgeting for some or all of these digital marketing strategies is one of the best ways to stay competitive in the 21st century.

 

Digital marketing is our specialty. We encourage you to contact us with any questions, comments, or concerns on this subject. It’s our goal to help businesses improve their online presence, increase brand awareness, and boost revenue. If you’re interested in discussing details, schedule a meeting with us. We’d love to sit down together to see how we can help shift your business into the digital age.


Originally published on February 21st, 2021

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